If you are new, please take a look at our plan which is in full swing right now and the core positions for riding this bear market in the June list published June 3rd. This is the real value of WOWS, this could be one of the biggest, most profitable trades you've ever made-that's the plan. Reading Trade Guild tonight will show you just how big this could be, even if we attain only a fraction of the implied targets.
Not a whole lot has changed in my analysis and we don't need to complicate things to make money. For those of you who need to or want to fill out short positions (I would make sure to have at least 25% uncommitted cash), then it looks like you'll get a decent chance to do that this week.
The 3C charts are showing (not unanimously, but a majority) an early negative divergence. The possible support levels that it may reach toward on the SPY include $101.80-$101.90, $101.60-$101.70. A full-bore shakeout (which is not uncommon but I believe the least likely could take the SPY just under $101. Unless events over the weekend and/or sentiment annihilates the positive 5 min+ divergences, in which case the market will just continue dropping like a stone. However, we work the probabilities, this isn't about guessing and that means we work with what we know right now so there are the probabilities.
As you can see on the Trade Guild article tonight, the current situation is extended beyond the 1929 scenario so I feel it is likely we will see the "Kiss resistance goodbye". This means we can expect a short rally to at least the neckline on the SPY at approximately $104.40. However the way the market has been working, has been to use technical analysis as a weapon against it's own practitioners. This would indicate to me that the most likely target would be above the resistance level of the neckline and into the gap level between $106 and $107.50 which would be a gift for anyone needing to fill out their short positions. If we make it to that level you know I'll be positing any reversals I see so you can add a little at a time and add the rest when/if we make it into the gap, but I would not wait to start adding in case things just go completely south, you want to have some position in place.
For hose of you who may want to try to trade this probable rally, you can use any number of leveraged market ETFs. There's no sense in trying to guess which sector will outperform the others in a few days of rally, which isn't enough time for any real rotation so I would just use a broad inverse ETF linked to one of the averages. For me personally, I'd choose UPRO as it is 3x leveraged the S&P, but I also have a high tolerance for risk. You could use a 2x leveraged ETF like QID also.
I hesitate to post individual long stock picks as the rally will most likely be too short to be of any benefit and again, news specific stocks are just a wild card. If the market will rally, a market based, leveraged ETF will get the job done.
Here are the current 3C charts showing the short term negative divergence and the longer term positive divergences that I believe will carry into the gap.
Click on the charts to enlarge
If you have specific questions, email me and I will respond ASAP. Happy belated 4th of July and have a great week.
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